Labour market issues will dominate the economic news with the quarterly wages and monthly labour force data both out.
Wages are a dominant issue for policy makers, especially the RBA which has for some time been hoping for some acceleration in wages growth to help meet its upbeat outlook for the economy. Higher wages growth will be important in boosting household incomes and spending and it is a vital requirement if inflation is to ever get back to the mid-point of the RBA target range. The current consensus is for annual wages growth to lift marginally to 2.2 per cent.
As the second chart (below) shows, employment growth has all but stalled in recent months after near boom conditions in 2017. This marked slowing in employment growth has coincided with a broadly flat unemployment rate and generally mixed news on the economy. If this is the start if a new trend – towards a weaker labour market – then hopes for a meaning boost in household spending, wages and inflation will quickly be dashed. The market is looking for employment to rebound by 25,000 but for the unemployment rate to remain unchanged at 5.5 per cent.
Source: RBA, indeed